Another Friday, another price rout. In a seeming rerun from a week earlier, weekend prices tanked hard Friday in response to lack of weather-related load and a bearish storage report in which the 81 Bcf injection exceeded most prior expectations.
Articles from Rout
What some had expected to be moderate softness Friday turned into a general rout. Beset by generally light cooling load outside the southernmost U.S., recent screen weakness, a California OFO and the industrial load loss associated with a weekend, price drops ranged from a quarter to around half a dollar. The West took most of the heaviest losses.
Key energy stocks suffered a rout again on Wall Street in the opening days of July, with Williams descending briefly below $5, Dynegy Inc. bouncing around under $7 a share, and analysts predicting that more of the same was ahead. One analyst said she feared the credit rating agencies’ constant downgrading of the creditworthiness of energy traders, which has pushed stocks to record depths, could end up shattering the companies completely.
It was an easy call to predict lower prices for the low-demand Memorial Day weekend, so nobody got caught by surprise Friday when an across-the-board dive swept the market. No point fell less than 20 cents, and western declines tended to be significantly larger than that.
The rout was on Tuesday in the cash market. Buffeted by a fairlybenign weather outlook, both near-term and for the transitionperiod into February, and a plunging screen, prices fell betweenabout 50 cents and a dollar at almost every point. Malin’s declineof about 15 cents spotlighted it as relatively firmer than the restof a very weak market.
The cash market ignored the preview of winter that was expectedto permeate nearly all U.S. weather over the weekend, insteadfocusing on another dime-plus screen dive and the fact that thechill is likely to be short-lived and was displacing cooling loadin the South. The result was widely varied price drops betweenabout a nickel and nearly 50 cents Friday.
Except for continued rises at some Northeast citygates, most ofthe cash market was in rout mode Wednesday. Price decreases of adime or more-much more in a few cases-prevailed at nearly allpoints despite cold weather blanketing much of the U.S. from theRockies eastward. A falling screen and forecasts that some areaswill be warming up this weekend constituted the main cashdepressants, sources said. Despite what one trader called a “ratherhealthy” AGA figure of 116 Bcf withdrawn from storage last week,few saw much chance of a holiday weekend rebound.
Despite warming temperatures that already had begun the processof melting snows from Monday’s Nor’easter, the futures market wasable to arrest a further meltdown of its own Tuesday as buyers andsellers were evenly matched. In fact, Tuesday’s price action was soorderly, that not only did the market etch an inside day with highsand lows within Monday’s, but also posted an identical $1.717settlement price. And although some bulls were somewhat reluctantto claim the day as a victory, others viewed the market’s abilityto hold ground following the 25-cent price slide since lastWednesday as promising.